DULUTH, Ga. -- Jittery investors retreating from the stock market, coupled with the two-year Treasury note recently falling 26 basis points to hit a three-year low, have led some credit unions to reconsider their investment options.

"Fear is the ruling determinant for investment decision making today," said Sarina Freedland, assistant vice president of investment services at Georgia Central Credit Union, speaking to attendees at the corporate's latest bi-weekly member market call.

"When yields fall, the immediate instinct is to invest longer term to provide some protection against those falling rates," Freedland said. "But today's unsettled markets require a break from traditional practice. The more plausible trade for now is to stay short and put cash in corporate certificates, which often yield above market."

Certificates under six months are yielding between 4.80 and 4.97%, Freedland said, adding other certificate of deposit programs are providing "attractive" one and two-year rates. Freedland pointed out that the fear driving the financial markets is a lack of credit availability stemming from the subprime mortgage crisis.

"As the world's financial institutions and Wall Street firms continue to announce large losses and capital write-downs, the concern has become 'who is going to lend money,'" Freedland said. "Lenders are simply afraid of what is hiding under the next borrower's balance sheet."

Over the past few weeks, various financial institutions have reported more than $500 billion in write-downs related to bad mortgages, Freedland said. Even the Federal Home Loan Mortgage Corp., the second-ranked buyer and guarantor of home loans, announced a record $2 billion loss and may need to raise new capital to stay healthy, she observed, adding that the market appears to be "screaming for additional rate cuts" by the Federal Reserve.

Meanwhile, Fed Funds Futures is currently predicting a 25 basis points decrease in the Fed Funds Target rate at the next FOMC meeting on Dec. 11, but with annualized Consumer Price Index at a 14-month high of 3.5%, the Fed is finding itself stymied by its own goals, Freedland said.

"It is reassuring for credit unions to know that they can depend on their corporate credit union in this time of tremendous volatility to provide a safe haven as well as very competitive returns," Freedland concluded.